What makes the competitive contribution of ERP strategic

  • Authors:

  • Arik Ragowsky;David Gefen

  • Affiliations:

  • Wayne State University;Drexel University

  • Venue:
  • ACM SIGMIS Database
  • Year:
  • 2008

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Abstract

In 1984, McFarlan suggested in his HBR article that a company might be able to use Information Technology (IT) to achieve strategic advantage in the marketplace. Although widely cited and recently elaborated on (Nolan & McFarlan, 2005), there is little empirical evidence to support it in the specific context of ERP (Enterprise Resource Planning) systems where IT is especially posed to have such a major impact. The objective of this study is to fill this gap, applying a contingency approach. The results, supporting Nolan and McFarlan (2005), show that while some ERP systems provide strategic advantage to some companies, ERP systems may not necessarily provide similar advantage to other companies due to the specific operational characteristics of each company and the way the ERP is used. The data collected from senior managers in different manufacturing companies who were closely involved in the implementation of ERP systems in their respective companies, show that McFarlan's (1984) and Nolan and McFarlan's (2005) propositions about IT in general apply also to ERP. Both competitive strategies enabled by the ERP and specific operational characteristics can place the organization in a strategic position, and when this happens, the IT unit is more likely to be under the authority of senior management. These findings seem to contradict Carr (2003) who clamed that IT cannot provide a company with competitive advantage.